Greek PM faces biggest party revolt yet as bailout approved

Greek Finance Minister Euclid Tsakalotos reacts as deputies attempt to disrupt his speech during a night parliamentary session in Athens, Greece, early August 14, 2015.Christian Hartmann

ATHENS (Reuters) - Greek Prime Minister Alexis Tsipras faced the widest rebellion yet from his leftist lawmakers as parliament approved a new bailout program on Friday, forcing him to consider a confidence vote that could pave the way for early elections.

After lawmakers bickered through the night on procedural matters, Tsipras comfortably won the vote on the country's third financial rescue by foreign creditors in five years thanks to support from pro-euro opposition parties. That clears the way for euro zone ministers to approve the deal later on Friday.

But the vote laid bare the depth of anger within Tsipras's leftist Syriza party at austerity measures in exchange for 85 billion euros in aid, as 43 lawmakers - or nearly a third of Syriza deputies - voted against or abstained.

The unexpectedly large contingent of dissenters, including former Finance Minister Yanis Varoufakis, heaped new pressure on Tsipras to swiftly clear the rebels from his party and call early elections to lock in popular support.

Tsipras remains hugely popular in Greece for standing up to Germany's insistence on austerity before capitulating under the threat of a euro zone exit. He would be expected to win again if snap polls were held now, given an opposition in disarray.

"I do not regret my decision to compromise," Tsipras said as he defended the bailout from euro zone and International Monetary Fund creditors in parliament. "We undertook the responsibility to stay alive over choosing suicide."

But the vote left the government with support from within its own coalition below the threshold of 120 votes in the 300-seat chamber, the minimum needed to command a majority and survive a confidence vote if others abstain.

In response, government officials said Tsipras was expected to call a confidence vote in parliament after Greece makes a debt payment to the European Central Bank on Aug. 20 - a move that could trigger the government's collapse and snap elections.

A senior lawmaker, Makis Voridis, from the opposition New Democracy party said his party would vote against Tsipras's coalition, raising the odds it would be toppled.

Still, some of those who rebelled against Tsipras on Friday could still opt to support the government in a confidence vote, as could other pro-European parties like the centrist Potami and the center-left PASOK, leaving unclear the final outcome.

FIGHT STARTS

The vote was only the latest in a series of events highlighting the deepening rift within Syriza, which stormed to power this year on a pledge to end austerity once and for all, before Tsipras accepted a bailout to avoid a banking collapse.

Since then far-left rebels have openly revolted at votes on bailout reforms and the combative parliamentary speaker Zoe Konstantopoulou has regularly delayed proceedings - most recently on Thursday, leaving infuriated lawmakers debating all night on procedures before a vote was held after daybreak.

The leader of Syriza's far-left rebel faction, former energy minister Panagiotis Lafazanis, took a step toward breaking away from the party by calling for a new anti-bailout movement.

Syriza would be weakened by the departure of the faction led by Lafazanis, but political analysts predict Tsipras would still return to power if elections were held in the autumn, though he would have to strike another coalition deal.

"While an early election could be helpful in terms of removing hardliners from a Tsipras-led Syriza and, possibly, forcing the party to adopt a more centrist stance, the most likely outcome will be another fragmented parliament in which no party controls an absolute majority," said Wolfgango Piccoli of Teneo Intelligence.

"This means that the 'new' Syriza – the party likely to win the largest amount of votes and seats – will have to strike another coalition deal to govern."

With the bill's passage, focus turns to a meeting of euro zone ministers in Brussels who now must approve the deal so aid can be disbursed before Athens must make a 3.2 billion euro debt payment to the European Central Bank on Aug. 20.

Athens is keen to get ratification so it can avoid having to take a new bridge loan to make the payment - a prospect Tsipras called a return to the country's crisis days.

But Germany - the biggest contributor to Greek bailout programs - remains deeply skeptical that Athens will live up to pledges to reform its economy and political system, raising the prospect it could seek to hold up approval.

Other more long-term concerns also remain. The IMF has made clear it would participate in the program only if Europe agreed to ease Greece's huge debt burden.

But Berlin opposes writing off any Greek debt, although it is open to the idea of extending grace periods before Athens has to start paying interest and principal on its bailout loans.

Tsipras has long argued Greece cannot repay all its debts and demanded a partial write-off. The creditors have agreed to consider the issue only after a review in October of the government's implementation of its side of the deal.